- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......

- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE- This blog has a copy of all header posts that I publish anywhere, so that those interested in seeing what my thoughts are on the markets can find them easily.

- I will be answering questions and responding to comments, so feel free to respond to any posts and I will see your comment even if it is not on the most recent post.

- If you're interested in seeing any intraday charts I post, I do that on twitter, and my twitter handle is @shjackcharts.

- The charts in the posts are as large as I can practically make them. if you would like to look at one more closely, click on it, and the link will take you to a larger version at screencast. If you click on that again, you will get a full page version, and can use the resizing function on your browser to enlarge parts of interest further.

Monday, 9 May 2011

Bearish Monday

For a long time Mondays were reliably bullish on SPX. No longer as SPX has closed down for the last six Mondays running, and eight of the last nine Mondays. Hard to say how this one will go, as EURUSD is bouncing after a very steep decline and both copper and silver have made nice intermediate lows with positive RSI divergence on the hourly chart. What is clear looking through various indices this morning though is that Dow, Transports and SPX have not made the obvious downside support trendlines. Here's the 60min SPX chart showing the downside target which is now in the 1323-5 area:

Nasdaq is harder to call, as there are two gap zones on the 60min chart and the upper one has been acting as good support. That may well hold even if the other indices dip a bit further to make their targets:

Looking at the Vix chart which has pinocchioed above the daily bollinger bands on each of the last two days, and then closed back within it, we have reached a significant resistance level which might deliver a bounce on equities. That's easiest to see on the 30min chart:

Notwithstanding any bounce this week though, I'm very doubtful that we've seen a major low on commodities, so I'm expecting this bounce to be a good time to pick short entries for the next move down. I don't have a good read on silver directly, but the position looks pretty clear on the gold daily chart, where there's a broadening ascending wedge extending back to the beginning of 2009. The support trendline is very strong with six touches and the downside target there would be in the 1350 area. As it happens however, there is an excellent alternative non-trendline target that must be considered, and that is support at the daily 150 SMA, which has also held six times since May 2009, and might hold again. The daily 150 SMA target would be in the 1400-1410 area. If the 150 SMA is broken, the wedge trendline should hold as support:

The move up in silver was so violent that all trendlines were broken, but the recent low almost reached the broken resistance trendline on the monthly chart that held from 2004 through to the end of 2010. That could hold as support, but if gold breaks the daily 150 SMA then it would be hard to see silver not retracing to the 30 area or below, with the obvious support then being at 28:

I thought I'd have a look at XLF today, as that is at an interesting stage. On the weekly chart declining resistance from the bubble high in 2007 is still holding:

There isn't much in the way of strong trendlines on the XLF daily chart, but it's interesting that XLF peaked just above the target for the falling wedge in 2010, and there is clearly a strong resistance zone in the 17.0 - 17.2 area, and even stronger support in the 13.2 - 13.4 area. Overall XLF might well be in a bullish rectangle that has formed since August 2009, and if so I'd expect to see XLF break down towards rectangle support soon. A possible 64% bearish descending triangle is also forming, but we'd need to see another hit of declining resistance to strengthen the pattern:

Overall I think the odds favor a gap fill and consolidation today. Most of those down Mondays recently haven't been down much. If SPX can hit the support trendline in the 1323-5 area then we should see a strong bounce from there:

No comments:

Post a Comment

Search This Blog

Subscribe To This Blog

Princeton Trader

My Other Sites

Followers

Donate in $

Donate in £

Donate Note

If you have found anything here particularly helpful, and would like to show appreciation of the green and folding variety, please feel free to do so and any contributions will be gratefully accepted. :-)

I've set up two donation buttons so that donations can be made in USD or GBP as selected. If anyone would like me to set up a Euro button please let me know.

Follow by Email

Follow By Email Note

The Follow By Email function works, but takes several hours to deliver new posts at the moment. I'm assuming this will improve in time. I'm considering switching to Wordpress as I know the email function works better there.

Total Pageviews

Disqus for Channels and Patterns

Disclaimer

Disclaimer: This website may include stock and market analysis. Any opinions, ideas, views and statements expressed here are opinion only, subject to change without notice and for informational purposes only. Trading stocks carries a high degree of risk. It is possible that an investor may lose part or all of their investment. Accuracy and timeliness of any information is not guaranteed and should only be used as a starting point for doing independent additional research allowing the investors to come to his or her own opinion. Nothing on this blog is to be considered a buy, hold or sell recommendation. Any investments, trades and/or speculations made in light of the opinions, ideas, and/or forecasts expressed or implied herein are committed solely at your own risk, financial or otherwise. Results are dependent on market conditions, timing and trading style. Comments posted on Disqus Threads are not moderated and are not representative of opinions of authors of this site.

Translation: You are responsible for your own investment decisions.Not anyone else.YOU.

Position disclaimer: Authors might OR might not have position/interest in securities mentioned on this site!